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LONDON (CBS.MW) - U.S. stock futures were starting to see small overnight gains fade on Monday as Treasury issues took an across-the-board hit in early trades -- one day ahead of the Federal Open Market Committee Meeting on interest rate policy.

Few underlying issues were seeing much trade, but tech stocks were notching modest gains.

An upgrade on Oracle Corp.
ORCL,
+2.13%
lifted the database-software stock to $11.80 last on the New York ECNs, up 4.5 percent from its Friday close.

Merrill Lynch raised its rating on Oracle to a buy, telling clients it believes "the downside in the stock is limited and the company has good exposure and leverage to a gradual economic recovery." The broker set a $15 price target on the stock.

"While there are still a few weeks left in the quarter we believe business is tracking well and should land within the revenue guidance range of 4-7 percent growth," Merrill said.

The Nasdaq 100 tracker
QQQ,
+1.98%
was last up 0.2 percent and the S&P 500 tracker
SPY,
+2.56%
was up 0.1 percent.

Corporate news has slowed to a trickle. Martha Stewart Living
MSO
warned that business challenges presented by the effects of Martha Stewart's legal personal legal situation are likely to persist, and expects to report a loss of 15 cents a share for the third quarter and losses of 18 to 20 cents a share for the year, versus the average analyst loss forecasts compiled by Reuters Research of 6 cents and 9 cents, respectively.

Cadence Design Systems
CDN,
-2.50%
said it planned to launch a $350 million bond convertible into shares. It said intends to use a portion of the proceeds to purchase up to $100 million of shares of its common stock as part of a previously announced stock repurchase program.

Shares of InterActive Corp.
IACI
slid $1.16, or 3.3 percent, to $33.55 after a report in the New York Times over the weekend said profits at its two big Internet travel sites - Expedia
EXPE,
+3.53%
and Hotels.com - may be inflated. The newspaper report also criticized the company for putting the "best spin" on its latest quarterly results by making them "maddeningly complex." The company responded Monday by saying the report contained "numerous inaccuracies."

European stocks were up modestly, mainly pricing in gains set late Friday in New York. A clearer tone was expected to emerge once U.S. trading volumes picked up from a very slow start. The euro was held below the $1.13 mark. Weak GDP figures in Italy held the euro back last week, and that trend looks as it has yet to shift. Tokyo stocks were up in thin, holiday trade.

In other broker action, U.S. Bancorp Piper Jaffray upped its rating on Adobe Systems
ADBE,
+1.84%
to a strong buy from outperform over the weekend, citing "strength in recent industry data (magazine ad revenue and NPD), expectations for a solid August quarter and evidence of the release of several new products within the next four months."

Deutsche Bank
DB,
+2.10%,
Germany's largest bank, rose 1.7 percent amid a Goldman Sachs upgrade to in-line. "While we continue to believe that Deutsche Bank offers less operating leverage than Credit Suisse
CSR,
to an improving revenue and credit environment, we believe that the recent underperformance versus the broader European banking universe should draw to a close," Ramsden said.

The state will charge that Morgan violated rules when it held a contest to see who could sell the most in-house mutual funds. The report said a Morgan Stanley spokeswoman told the paper it had not seen the complaint and therefore could not comment on any charges.

Shares of McLeodUSA
MCLD,
+0.72%
rallied 19 cents, or 21 percent, to $1.08 in pre-open trading after the company announced the signing of an agreement with Kmart
KMRT
to be the primary local telecommunications services provider to 176 Kmart stores in 14 states.

M&A

In deal-activity, First Niagara Financial Group, Inc
FNFG
said Monday it had agreed to acquire Troy Financial Corp
TRYF
for $35.50 a share in cash and stock in a deal valued at about $356.6 million.

The deal will give the Lockport, New York-based First Niagara a combined network of 67 branches in 19 counties throughout New York State. The purchase price offers Troy shareholders a premium of about 23 pct over the company's closing share price on August 8

Firm bids for Vivendi Universal's
V,
+3.08%
U.S. entertainment unit are due by Aug. 18, Reuters reported on Monday. Vivendi hopes to conclude the bidding process by late August or early September, and is still holding by its $14 billion price tag even if bidders have indicated that price is too expensive for the assets, the report said.

Randgold
GOLD,
-0.59%
was 5.9 percent lower in small London trade as the group said late it was bidding $1.46 billion all-stock for Ashanti Goldfields (ASN), trumping an offer from AngloGold. See story on Randgold offer

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